This translation was prepared by Tax Interpretations Inc. The CRA did not issue this document in the language in which it now appears, and is not responsible for any errors in its translation that might impact a reader’s understanding of it or the position(s) taken therein. See also the general Disclaimer below.
Principal Issues: Whether a taxpayer is eligible to the HBTC when he/she acquired a housing unit by way of donation?
Position: Yes, if all other conditions of the HBTC are met.
Reasons: A housing unit acquired by way of gift is acquired for the purpose of the HBTC. Use of the term acquisition in the ITA.
ROUNDTABLE ON THE TAXATION OF INDIVIDUALS, FEBRUARY 2, 2017
QUEBEC ORDER OF CPAs
1.8 – First-time home buyer’s credit
Section 118.05 of the Income Tax Act (the “Act”) provides for a first-time home buyer’s credit. Subsection (1) of this section defines a "qualifying home" as a home acquired, whether jointly or otherwise, after January 27, 2009 if,
(a) the home is acquired by the individual, or by the individual’s spouse or common-law partner, and
(i) the individual intends to inhabit the home as a principal place of residence not later than one year after its acquisition,
(ii) the individual did not own, whether jointly or otherwise, a home that was occupied by the individual in the period
(A) that began at the beginning of the fourth preceding calendar year that ended before the acquisition, and
(B) that ended on the day before the acquisition[…]
Question to CRA
Can the CRA confirm that an individual would be entitled to the HBTC, for the 2016 year, in the situation where the parents of that individual gifted the home to the individual during the year, the said home? All of the above conditions for a qualifying home are met, that is, neither the individual nor the individual's spouse had previously owned a home, and they intend to make it their principal place of residence no later than one year after the gift.
Under section 118.05, the HBTC is a non-refundable tax credit, of $5,000 multiplied by the appropriate percentage for the taxation year. For the year 2016, this rate is 15%. This credit is deductible in computing an individual's tax for the taxation year in which the individual acquired a qualifying home eligible for the HBTC.
The CRA is of the view that the acquisition of a qualifying home by way of gift is a valid acquisition for the purposes of the HBTC. Consequently, subject to compliance with all the other conditions of section 118.05, the mere fact of acquiring a home by way of gift does not in itself prevent an individual from applying for the HBTC.
February 2, 2017
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